PUT AND SECURITY AGREEMENT
THIS PUT AND SECURITY AGREEMENT (the "Agreement") is made this 19th
day of December, 1996, and becomes effective upon the closing of the
Offering (as defined below), by and among VISION HEALTH CARE, INC., a
Florida corporation whose address is c/o Barrack & Xxxxx, P.A., 000 Xxxx
Xxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000 ("VHC"), DENTAL NETWORK, INC., a
Florida corporation whose address is 0000 Xxxx Xxxxxx Xxxxx, Xxxxx,
Xxxxxxx 00000 ("Investor") and Xxxxx X. Xxxxxxx, O.D., Xxxxxx X.
Xxxxxxxxx, O.D., Xxx X. Xxxxxxx, C.P.A., M.S.M., Xxxx X. Xxxxxx, O.D.,
Xxxxxxxx X. Xxxxxx, Xxxxx X. Liane, O.D., Xxxxxxx X. Xxxxx, O.D., Xxxxxxxx
X. Xxxxxxxxx, O.D., Xxxxxxx X. Xxxx and Xxxx X. Xxxxxxx, O.D.
(collectively, the "Shareholders").
RECITATION OF FACTS
A. VHC was formed in May 1995 for the purpose of acquiring the
operating assets of Vision Care, Inc. ("VCI"), a non-stock, not-for-profit
Florida corporation that is engaged in the management, administration and
provision of prepaid vision care service plans in Florida.
B. In order to raise the funds necessary to purchase VCI's assets,
VHC filed a registration statement with the Securities and Exchange
Commission on Form S-1 (Registration No. 333-3530) under the Securities
Act of 1933, as amended, pursuant to which it is offering to sell up to
504,000 shares of VHC's common stock, $0.01 par value (the "Common Stock")
at $10.00 per share (the "Offering").
C. Simultaneously with the effectiveness hereof, Investor is
purchasing 100,000 shares of the Common Stock pursuant to the terms of the
Offering, subject to certain terms and conditions set forth in this
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements contained in this Agreement and for
other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Definitions. The following terms shall have the meanings
indicated below and shall be construed to have the broadest possible
meanings permitted under the Code:
"Agent" means Xxxxx X. Liane, O.D., or his substitute as
appointed pursuant to Section 2.
"Agreement" means this Put and Security Agreement as it is
amended, modified or supplemented from time to time.
"Closing" means generally the execution and delivery of those
documents, securities and/or funds necessary to effect the transactions
contemplated by Section 3.(b) or Section 3.(c).
"Code" means the Uniform Commercial Code as enacted by the State
of Florida, as it shall be amended from time to time.
"Collateral" means (i) any and all shares of Common Stock, now
or hereafter owned by Shareholders, (ii) all of Shareholders' respective
options to acquire Common Stock which are assignable and held as of the
date hereof (as described in further detail on Schedule A) or held after
the date hereof, and (iii) the Shareholders' interests in their respective
options to acquire Common Stock which are not assignable and held as of
the date hereof (as described in further detail on Schedule A) or held
after the date hereof; or, to the extent there is substitute collateral as
provided for in Section 8 hereof, "Collateral" means such substitute
collateral in lieu of (i), (ii) and (iii).
"DNI Shares" means the shares of Common Stock purchased by
Investor in the Offering.
"Pro Rata" means pro rata based on the relative percentages set
forth on Schedule A.
"Put Notice" means the written notice delivered to each
Shareholder by Investor pursuant to Section 3.(a).
"Put Option" means the put option granted to Investor pursuant
to Section 3 hereof.
"Put Price" means $1,000,000, plus 12% per annum simple interest
calculated from the date of this Agreement through the day before the
Closing of a transaction pursuant to Section 3.(b).
"Security Interest" means the security interest (as that term is
defined by the Code) granted by this Agreement.
2. Agent. The parties agree that Agent shall act as the
spokesperson for the Shareholders and that no Shareholder other than Agent
shall have any authority to (a) advise Investor whether the Shareholders
as a group have elected (i) to purchase all of the DNI Shares in exchange
for the Put Price pursuant to Section 3.(b) or (ii) to deliver all the
Collateral pursuant to Section 3.(c) or (b) to otherwise bind the
Shareholders as a group pursuant hereto. All notices to the Shareholders
shall be deemed delivered to the Shareholders on the date deemed delivered
to Agent pursuant to Section 13.(j). Investor agrees to provide a copy of
any notice to Agent to each other Shareholder. In the event Agent dies,
is adjudged incompetent or otherwise is unable or unwilling to continue to
serve as Agent, a substitute Agent may be appointed by a majority-in-
interest of the other Shareholders.
3. Put Option In Favor of Investor.
(a) Put Option. Beginning on the 120th day following the
Florida Department of Insurance's approval of the transactions
contemplated herein, and extending to and including July 31, 1998,
Investor shall have the right to require the Shareholders (acting as a
group) to elect to either (1) purchase all of the DNI Shares, severally
but not jointly (in the respective percentages set forth on Schedule A),
in exchange for the Put Price pursuant to Section 3.(b), or (2) deliver
all of the Collateral pursuant to Section 3.(c). The right shall be
exercised by delivering written notice (the "Put Notice") to Agent and
each of the other Shareholders. Upon the receipt of the Put Notice by
Agent, the Shareholders, acting as a group through Agent, shall have 73
days to notify Investor in writing of their intent to either purchase all
of the DNI Shares in exchange for the Put Price pursuant to Section 3.(b)
or to deliver all of the Collateral pursuant to Section 3.(c); provided,
however, that the Shareholders shall use reasonable efforts to make an
election as soon as possible after Agent's receipt of the Put Notice and
shall notify Investor as soon as practicable after they have made such
election. In the event that the Shareholders have not notified Investor
in writing within such 73-day period, the Shareholders shall be deemed to
have made an election to deliver all of the Collateral to Investor
pursuant to Section 3.(c).
(b) Sale of DNI Shares. The Shareholders may satisfy their
obligations under Section 3.(a) by purchasing all of the DNI Shares in
exchange for the Put Price, in which case Investor shall deliver all of
the DNI Shares free of all security interests and other claims, interests
and encumbrances by surrendering all certificates representing the DNI
Shares, duly endorsed if the Shareholders shall so require or accompanied
by appropriate instruments of transfer satisfactory to the Shareholders,
at VHC's principal office. In the event any Shareholder's purchase of his
Pro Rata share of the DNI Shares requires Florida Department of Insurance
approval, each Shareholder agrees to file any necessary applications with
the Department as soon as practicable, and Investor agrees to cooperate in
the making of any such applications. Investor agrees to execute such
other documents as the Shareholders may reasonably require in connection
with the delivery of the DNI Shares. Upon the delivery of his Pro Rata
portion of the Put Price, the consummation of the Closing and Florida
Department of Insurance approval (if necessary), no Shareholder shall have
any further liability or obligation under this Section 3, each Shareholder
shall be treated for all purposes of this Agreement as the owner of his
Pro Rata portion of the DNI Shares and this Agreement shall terminate.
(c) Transfer of the Collateral. In the event that the
Shareholders do not satisfy their obligations under Section 3.(a) by
purchasing all of the DNI Shares in exchange for the Put Price, each
Shareholder shall transfer his Pro Rata portion of the Collateral to
Investor free of all security interests and other claims, interests and
encumbrances by surrendering any certificates and other documents
representing the Collateral held by such Shareholder, duly endorsed if
Investor shall so require or accompanied by appropriate instruments of
transfer satisfactory to Investor, at VHC's principal office. In the
event Investor's ownership of the Collateral requires Florida Department
of Insurance approval, Investor agrees to file any necessary applications
with the Department as soon as practicable, and each Shareholder agrees to
cooperate in the making of any such applications. Upon the transfer of
his Pro Rata portion of the Collateral and the consummation of the
Closing, no Shareholder shall have any further liability or obligation
under this Section 3, Investor shall be treated for all purposes of this
Agreement as the owner of the Collateral and this Agreement shall
terminate. If the Collateral is transferred to Investor pursuant to this
Section 3.(c), the Shareholders will no longer have the right to exercise
any unexercised options held on the date of such transfer, and such
options shall expire at Investor's direction at the Closing or any time
thereafter. VHC shall be a third party beneficiary to the preceding
sentence. Notwithstanding anything in this Section 3.(c) to the contrary,
at the election of Investor, Investor may deliver to VHC on behalf of any
Shareholder not later than 10 days before the Closing the option exercise
price of any non-assignable options held by such Shareholder shall use the
money to exercise such options, and VHC shall deliver the underlying
shares of Common Stock to Investor at the Closing.
(d) Closing. The Closing of (1) the purchase and sale of the
DNI Shares or (2) the transfer of the Collateral, as the case may be,
shall take place at VHC's principal office on the seventy-sixth day after
the Agent receives the Put Notice (provided that if such day is a
Saturday, Sunday or holiday, then on the next business day), or on such
other day as Investor and Agent shall agree to in writing. The parties
agree that any transaction hereunder that requires Florida Department of
Insurance approval shall be closed in escrow pending such approval, with
Investor directing the investment of any escrowed funds resulting from the
Shareholders' purchase of the DNI Shares pursuant to Section 3.(b).
(e) Termination. The Put Option (assuming that it has not been
exercised) becomes void if (i) VHC merges with, is acquired by, or comes
under common control with Investor or (ii) there is a change of control of
VHC which a majority of the Investor Nominees (as defined below) approved.
4. Representations, Warranties and Covenants of VHC and the
Shareholders. To induce Investor and the Shareholders to enter into and
perform this Agreement, VHC and the Shareholders, as applicable, make the
following representations, warranties and covenants to Investor, each of
which is true and correct on the date hereof and shall remain true and
correct to and including the date of a Closing.
(a) Corporate.
(i) Organization. VHC is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Florida.
(ii) Corporate Power. VHC has all requisite corporate
power and authority to own, operate and lease its properties, to
carry on its business as and where such is now being conducted, to
enter into this Agreement and the other documents and instruments to
be executed and delivered by VHC and to carry out the transactions
contemplated hereby and thereby.
(b) Authority. The execution and delivery of this Agreement
and the other documents and instruments to be executed and delivered by
VHC pursuant hereto and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by the Board of Directors of
VHC. No other corporate act or proceeding on the part of VHC or its
shareholders is necessary to authorize this Agreement or the other
documents and instruments to be executed and delivered by VHC pursuant
hereto or the consummation of the transactions contemplated hereby and
thereby. This Agreement constitutes, and when executed and delivered, the
other documents and instruments to be executed and delivered by VHC
pursuant hereto will constitute, valid and binding agreements of VHC,
enforceable in accordance with their respective terms, except as such may
be limited by bankruptcy, insolvency, reorganization or other laws
affecting creditors' rights generally, and by general equitable
principles. All actions have been taken, if required, so that the
provisions of Sections 607.0901 and 607.0902, Florida Statutes, are and
shall be inapplicable to Investor's purchase of the DNI Shares and to all
other transactions contemplated by this Agreement.
(c) No Violation. Neither the execution and delivery of this
Agreement or the other documents and instruments to be executed and
delivered by VHC pursuant hereto, nor the consummation by VHC of the
transactions contemplated hereby and thereby (a) will violate any
applicable law or order, (b) will require any authorization, consent,
approval, exemption or other action by or notice to any government entity,
except for the Florida Department of Insurance's approval of VHC's
Application for Certificate of Authority, Statement of Acquisition of
Control with respect to Vision Care, Inc.'s assets, and the transactions
contemplated by this Agreement, or (c) will violate or conflict with, or
constitute a default (or an event which, with notice or lapse of time, or
both, would constitute a default) under, or will result in the termination
of, or accelerate the performance required by, any term or provision of
the Articles of Incorporation or Bylaws of VHC or of any contract,
commitment, understanding, arrangement, agreement or restriction of any
kind or character to which VHC is a party.
(d) Investor Representation on VHC's Board of Directors. VHC
represents that it currently has four vacancies on its Board of Directors
and promptly following the date hereof shall elect four nominees selected
by Investor and reasonably acceptable to VHC's Board of Directors
(collectively, "Investor Nominees") to fill the four vacancies. Two
Investor Nominees shall be elected to a one-year term, one Investor
Nominee shall be elected to a two-year term and one Investor Nominee shall
be elected to a three-year term. Each Investor Nominee shall be nominated
for re-election at the first meeting of shareholders of VHC at which
directors are to be elected following the expiration of his respective
initial term, and each Shareholder agrees to vote his shares of Common
Stock in favor of such election. Thereafter, so long as Investor
continues to beneficially own at least 100,000 shares of Common Stock, at
each annual or special meeting of shareholders of VHC at, or the taking of
action by written consent of shareholders of VHC with respect to, which
any directors are to be elected, Investor shall have the right to nominate
for election to the Board of Directors that number of directors (such
directors also, "Investor Nominees") which, when added to the number of
directors who are then Investor Nominees and who will continue to serve as
directors without regard to the outcome of the election at such meeting or
by such consent, represents 25% of the total number of directors. In
computing the number of Investor Nominees, any fraction is to be rounded
down to the nearest whole number. VHC will support the nomination of each
Investor Nominee and will exercise all authority under applicable law to
cause each Investor Nominee to be elected to the Board, and each
Shareholder agrees to vote his shares of Common Stock in favor of such
election. In addition, VHC's Board of Directors shall elect an Investor
Nominee reasonably acceptable to the Board to fill any mid-term vacancy
created by the resignation or other early termination of the term of an
Investor Nominee prior to its scheduled expiration, and VHC agrees to
allow at least one Investor Nominee the opportunity to serve on each
committee formed by its Board of Directors. As a condition to their
election, each Investor Nominee must agree to resign from the Board of
Directors at the Closing, if any, of the Shareholders' purchase of DNI
Shares pursuant to Section 3.(b).
(e) Removal of Blank Check Preferred Stock; Meetings Called by
Shareholders. VHC's Board of Directors has approved, and the Board shall
submit to VHC's shareholders at VHC's 1997 annual meeting of shareholders,
a proposed amendment to its Articles of Incorporation (i) removing the
provision authorizing "blank check" preferred stock that can be issued by
the Board of Directors with rights and preferences established by the
Board, and (ii) reducing the percentage of shareholders required to call a
special meeting of the shareholders from 35% to 15%. VHC's Board of
Directors shall recommend that VHC's shareholders vote in favor of such
matters and each Shareholder agrees to vote his shares of Common Stock in
favor of such matters. VHC shall use reasonable best efforts to hold its
1997 annual meeting no later than March 31, 1997.
(f) No Dividends. VHC agrees that it will not declare any
dividend on the Common Stock on and between the date that Agent receives
the Put Notice and the date of the Closing, if any.
(g) Insurance. VHC agrees that it will use reasonable efforts
to obtain a directors' and officers' liability insurance policy as soon as
practicable after the closing of the Offering and to maintain such
coverage with respect to such periods as an Investor Nominee shall serve
as a director.
(h) Return of Subscription Funds. In the event that the
Florida Department of Insurance has not approved the transactions
contemplated by this Agreement on or before January 31, 1997, VHC shall,
within 10 days after Investor's demand therefor, return all of Investor's
funds used to purchase the DNI Shares, together with interest thereon.
The Company acknowledges that Investor's subscription for the purchase of
the DNI Shares is subject to the condition precedent that Investor shall
have obtained an advance of $1,000,000 under its credit agreement with
Nationsbank.
(i) Issuance of Shares to Health Care Facilities. VHC agrees
that it will not issue any shares of Common Stock or other form of
security to any entity which is engaged, or which is an affiliate of
another entity which is engaged, to VHC's knowledge, in the principal
business of owning or operating physical facilities for use by health care
providers, without the prior written consent of Investor.
(j) Sale of Shares in Offering. VHC agrees that it will not
sell more than 300,000 shares of Common Stock in the Offering.
(k) Further Actions. VHC shall take all actions that may be
necessary or appropriate, from time to time, to effectuate the purposes of
and the transactions contemplated by this Agreement, and shall not give
effect to any action by any Shareholder which is inconsistent with the
provisions of this Agreement, including Sections 3, 7 and 12.
(l) Legal Opinion. Prior to and as a condition of the release
from escrow to VHC of the subscription funds representing the purchase
price of the DNI Shares, Xxxxx & Xxxxxxx, as counsel to VHC, shall deliver
an opinion to Investor covering such matters as are customary for
transactions of this type and as to which Investor's counsel may
reasonably request.
5. Representations, Warranties and Covenants of Investor. To
induce VHC and the Shareholders to enter into and perform this Agreement,
Investor makes the following representations, warranties and covenants to
VHC and the Shareholders, each of which is true and correct on the date
hereof and shall remain true and correct to and including the date of a
Closing.
(a) Organization. Investor is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Florida.
(b) Corporate Power. Investor has all requisite corporate
power and authority to own, operate and lease its properties, to carry on
its business as and where such is now being conducted, to enter into this
Agreement and the other documents and instruments to be executed and
delivered by Investor and to carry out the transactions contemplated
hereby and thereby.
(c) Authority. The execution and delivery of this Agreement
and the other documents and instruments to be executed and delivered by
Investor pursuant hereto and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by the Board of
Directors and shareholders of Investor. No other corporate act or
proceeding on the part of Investor or its shareholders is necessary to
authorize this Agreement or the other documents and instruments to be
executed and delivered by Investor pursuant hereto or the consummation of
the transactions contemplated hereby and thereby. This Agreement
constitutes, and when executed and delivered, the other documents and
instruments to be executed and delivered by Investor pursuant hereto will
constitute, valid and binding agreements of Investor, enforceable in
accordance with their respective terms, except as such may be limited by
bankruptcy, insolvency, reorganization or other laws affecting creditors'
rights generally, and by general equitable principles.
(d) No Violation. Neither the execution and delivery of this
Agreement or the other documents and instruments to be executed and
delivered by Investor pursuant hereto, nor the consummation by Investor of
the transactions contemplated hereby and thereby (a) will violate any
applicable law or order, (b) will require any authorization, consent,
approval, exemption or other action by or notice to any government entity,
except for the Florida Department of Insurance's approval of the
transactions contemplated by this Agreement, or (c) will violate or
conflict with, or constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, or will result
in the termination of, or accelerate the performance required by, any term
or provision of the Articles of Incorporation or Bylaws of Investor or of
any contract, commitment, understanding, arrangement, agreement or
restriction of any kind or character to which Investor is a party.
(e) Legal Opinion. Prior to the closing of the Offering, Steel
Xxxxxx & Xxxxx, LLP, as counsel to Investor, shall deliver an opinion to
VHC covering such matters as are customary for transactions of this type
and as to which VHC's counsel may reasonably request.
6. Further Representations and Warranties of the Shareholders. To
induce VHC and Investor to enter into and perform this Agreement, each
Shareholder makes the following representations, warranties and covenants
to VHC and Investor, each of which is true and correct on the date hereof
and shall remain true and correct to and including the date of a Closing.
(a) Power; Solvency. Such Shareholder has the full power and
authority to enter into this Agreement and this Agreement has been duly
executed and is enforceable in accordance with its terms, except for such
limits thereon arising from bankruptcy and similar laws. As of the date
hereof, such Shareholder's assets are equal to or exceed in value such
Shareholder's liabilities, and such Shareholder is paying his debts as
they become due.
(b) Good Title. That portion of the Collateral owned by such
Shareholder as of the date hereof is, and hereafter will be, owned free
and clear of all security interests and other claims, interests and
encumbrances, except the Security Interest and the transfer restrictions
set forth in VHC's Articles of Incorporation (which transfer restrictions
are not applicable to the transactions contemplated by Section 3 of this
Agreement).
(c) Security Interest. Such Shareholder has taken all action
necessary such that, simultaneously with the effectiveness hereof,
Investor has a perfected Security Interest in the Collateral owned by the
Shareholder as of the date hereof, as described in Section 8 below.
7. Further Covenants of the Shareholders. So long as this
Agreement has not been terminated as provided hereafter, each Shareholder:
(a) Title. Will defend the Collateral owned by such
Shareholder against the claim of all other persons;
(b) No Encumbrances. Will keep the Collateral owned by such
Shareholder free of all security interests and other claims, interests and
encumbrances, except the Security Interest and the transfer restrictions
set forth in VHC's Articles of Incorporation;
(c) No Sale, Etc. Will not assign, deliver, sell, transfer,
lease or otherwise dispose of (including dispositions by operation of law)
any portion of the Collateral owned by such Shareholder, or any interest
therein;
(d) Location of Shareholders. Will notify Investor in writing
at least 30 days in advance of any change in such Shareholder's address
from that specified below his signature;
(e) Stock Powers, etc. Has executed and delivered and will
execute and deliver to Investor such stock powers, stock certificates and
other documents, and take such other action as Investor may deem advisable
to perfect the Security Interest created by this Agreement;
(f) Taxes. Will pay all taxes, assessments and other charges
of every nature, and any penalties or interest with respect thereto, which
may be levied, assessed or imposed on or against the Collateral owned by
such Shareholder and in connection with the Security Interest therein and
any transfer thereof to Investor;
(g) Preserve Rights. Will not take or permit to be taken any
action which might (i) jeopardize or diminish any right of such
Shareholder or Investor in the Collateral owned by such Shareholder or
(ii) be inconsistent with the obligation to transfer all of the Collateral
to Investor pursuant to Section 3.(c); provided, however, that the
retirement or other termination, whether voluntary or involuntary, of any
Shareholder's employment or other relationship with VHC which results in
the termination of such Shareholder's rights and interest in any option in
accordance with the terms thereof shall not violate this covenant;
(h) Compliance with Laws. Will in all material respects comply
with all laws and regulations, including all securities laws, will timely
file all forms, reports and schedules required to be filed by or with all
governmental agencies and otherwise timely make all disclosures required
to be made in connection with the Collateral owned by such Shareholder;
and
(i) Further Assurances. Will take all other action reasonably
requested by Investor at any time and from time to time to effectuate the
intent of this Agreement, to protect and preserve the Collateral owned by
such Shareholder, and to protect, preserve and perfect the Security
Interest of Investor.
8. Grant of Security Interest. In order to secure the
Shareholders' obligations set forth in Section 3, each Shareholder hereby
pledges, delivers, transfers and assigns to Investor certificates, stock
powers duly endorsed in blank and other documents evidencing, and grants
to Investor a continuing, unconditional and perfected Security Interest
in, that portion of the Collateral owned by such Shareholder to secure the
prompt, timely and complete payment of the Put Price or, if applicable,
the transfer of all of the Collateral, upon the exercise of the Put
Option. Notwithstanding anything herein to the contrary, all
Shareholders, as a group, may substitute cash or U.S. Treasuries (of a
type and with a fair market value acceptable to Investor acting
reasonably) for the Collateral, provided that the cash or U.S. Treasuries
is for an amount equal to or greater than $1,205,000, provided, however,
that once substituted, such cash or U.S. Treasuries shall serve as the
Collateral and no further substitutions shall be permitted. All interest
earned on such substitute collateral shall be for the benefit of the
Shareholders and, to the extent not utilized to satisfy the Put Price,
will be refunded to the Shareholders.
9. Default. If all of the Shareholders acting together fail, upon
Investor's exercise of the Put Option, to elect to purchase and to
purchase the DNI Shares in exchange for the Put Price or to transfer the
Collateral to Investor in accordance with the terms and conditions set
forth in Section 3, then Investor may retain the DNI Shares and, as its
sole remedy, take title to all of the Collateral. Each Shareholder
authorizes and appoints Investor, after the occurrence of such default, as
such Shareholder's attorney-in-fact to transfer all or, in Investor's sole
discretion, any part of the Collateral into Investor's name or that of its
nominee so that Investor or its nominee may appear of record as the sole
owner of the shares of stock.
10. Voting of Pledged Shares. Unless and until the Collateral is
transferred to Investor pursuant to the terms and conditions of this
Agreement, each Shareholder shall continue to have the right (subject to
his obligations under this Agreement) to:
(a) attend all meetings of shareholders of VHC held after the
date of this Agreement and to vote the shares of such Shareholder's stock
which comprise the Collateral at those meetings;
(b) consent to any action by or concerning VHC for which the
consent of the shareholders of VHC is or may be necessary or appropriate;
and
(c) without limitation to do all things which such Shareholder
could do as a shareholder of VHC.
11. Distributions in Respect of Collateral. Whether or not a
material breach of a representation, warranty or covenant made by a
Shareholder herein has occurred, each Shareholder assigns to, and
authorizes Investor to receive, any interest, principal, dividends,
distributions, or other income or payments of whatever nature (whether in
cash or in kind) now or hereafter made in respect of the Collateral,
including those made in connection with the dissolution, liquidation, sale
of all or substantially all assets, merger, consolidation, or other
reorganization of VHC, or any stock dividend, stock split,
recapitalization, reclassification or otherwise (collectively,
"Distributions"), to surrender such Collateral or any part thereof in
exchange therefor, and to hold any such Distribution as part of the
Collateral; provided, however, that Investor or its nominee need not
collect any such Distribution on any Collateral or give any notice of
nonpayment with respect to such Distributions and further provided that if
no material breach of a representation, warranty or covenant made by a
Shareholder herein shall have occurred (or would result), each Shareholder
may receive for his own account any regular cash dividends.
12. Covenants Not to Compete.
(a) In Favor of VHC. While any individual nominated by
Investor sits on VHC's Board of Directors, Investor will not, directly or
through a subsidiary, engage in the business of providing vision care
plans, or own an equity interest in or, through its nominee, hold a board
of directors' position with a business organization engaged in the
business of providing vision health plans, or otherwise engage in any
practice the purpose of which is to evade the provisions of this covenant
not to compete, provided, however, that the foregoing shall not prohibit
(i) the continuation of Investor's existing arrangements with other vision
care plans, or (ii) the ownership of securities of corporations which are
listed on a national securities exchange or traded in the national
over-the-counter market in an amount which shall not exceed 5% of the
outstanding shares of any such corporation. The parties agree that the
geographic scope of this covenant not to compete shall extend throughout
the State of Florida. In the event a court of competent jurisdiction
determines that the provisions of this covenant not to compete are
excessively broad as to duration, geographical scope or activity, it is
expressly agreed that this covenant not to compete shall be construed so
that the remaining provisions shall not be affected, but shall remain in
full force and effect, and any such over broad provisions shall be deemed,
without further action on the part of any person, to be modified, amended
and/or limited, but only to the extent necessary to render the same valid
and enforceable in such jurisdiction.
(b) In Favor of Investor.
(i) While Investor owns any shares of Common Stock
(including the DNI Shares), VHC will not, directly or indirectly, engage
in, continue in or carry on the business of providing and/or administering
dental care plans (including owning or controlling any financial interest
in any corporation, partnership, firm or other form of business
organization which is so engaged), or otherwise engage in any practice the
purpose of which is to evade the provisions of this covenant not to
compete, provided, however, that the foregoing shall not prohibit the
ownership of securities of corporations which are listed on a national
securities exchange or traded in the national over-the-counter market in
an amount which shall not exceed 5% of the outstanding shares of any such
corporation.
(ii) While Investor owns at least 100,000 shares of Common
Stock and in the event the Shareholders transfer the Collateral to
Investor pursuant to Section 3.(c), for a period of one year thereafter,
no Shareholder will, directly or indirectly, engage in, continue in or
carry on the business of providing and/or administering vision care plans
(including owning or controlling any financial interest in any
corporation, partnership, firm or other form of business organization
which is so engaged), or otherwise engage in any practice the purpose of
which is to evade the provisions of this covenant not to compete,
provided, however, that the foregoing shall not prohibit the continuation
of such Shareholder's existing ownership of, investments with or other
relationships with any individual or entity engaged in the business of
providing and/or administering vision care plans, nor shall it prohibit
the ownership of securities of corporations which are listed on a national
securities exchange or traded in the national over-the-counter market in
an amount which shall not exceed 5% of the outstanding shares of any such
corporation nor shall it prohibit any other passive ownership in or
investment by any Shareholder in a non-public company which constitutes
10% or less of the equity thereof. Notwithstanding the foregoing, a
Shareholder shall not be subject to this covenant not to compete after the
expiration (without exercise) of the Put Option, unless the Shareholder
owns shares of Common Stock or other equity securities of the Company.
(iii) The parties agree that the geographic scope of
the covenants not to compete set forth in this Section 12.(b) shall extend
throughout the State of Florida. In the event a court of competent
jurisdiction determines that the provisions of either covenant not to
compete are excessively broad as to duration, geographical scope or
activity, it is expressly agreed that this covenant not to compete shall
be construed so that the remaining provisions shall not be affected, but
shall remain in full force and effect, and any such over broad provisions
shall be deemed, without further action on the part of any person, to be
modified, amended and/or limited, but only to the extent necessary to
render the same valid and enforceable in such jurisdiction.
13. Miscellaneous Provisions.
(a) Care of Collateral, Etc. Investor shall exercise
reasonable care in the custody and preservation of the Collateral to the
extent required by law and it shall be deemed to have exercised reasonable
care if it takes such action for that purpose as the Shareholders shall
reasonably request in writing.
(b) Headings. The headings contained in this Agreement are for
convenience and reference purposes only, and are in no way intended to
describe, interpret, define or limit the scope, extent or intent of this
Agreement or any provision hereof.
(c) Pronouns and Plurals. Whenever required by the context,
any pronoun used in this Agreement shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns,
pronouns and verbs shall include the plural and vice versa.
(d) Time. Time is of the essence for this Agreement.
(e) Costs of Litigation. The parties agree that the prevailing
party in any action brought with respect to or to enforce any right or
remedy under this Agreement shall be entitled to recover from the other
party or parties all reasonable costs and expenses of any nature
whatsoever incurred by the prevailing party in connection with such
action, including, without limitation, attorneys' fees (whether incurred
at trial or on appeal) and prejudgment interest.
(f) Waiver. No single or partial exercise of any right, power
or privilege under this Agreement shall preclude the further exercise of
such right, power or privilege, or the exercise of any other right, power
or privilege. No waiver shall be valid against any party hereto unless
made in writing and signed by the party against whom enforcement of such
waiver is sought and then only to the extent expressly specified therein.
(g) Assignment; Benefit. No assignment by any party hereto
shall relieve such party of its obligations hereunder. The terms "VHC,"
"Investor" and "Shareholders" as used in this Agreement include the heirs,
personal representatives, successors and/or assigns of those parties and
this Agreement shall benefit and bind such parties. Except to the extent
expressly provided for herein, nothing contained in this Agreement shall
be deemed to confer upon any other person any right or remedy under or by
reason of this Agreement.
(h) Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws and judicial decisions
of the State of Florida, without regard to conflict of law principles
thereunder.
(i) Amendment and Modification. The parties hereto may amend,
modify and supplement this Agreement in such manner as may be agreed upon
by them in writing.
(j) Notice. All notices, requests, demands and other
communications required or permitted by this Agreement shall be in writing
and given to the parties at the addresses set forth in the introductory
paragraph or below their signatures, as applicable, or at such other
address as may be designated in writing from time to time by one party to
the others. All such communications shall be (a) personally delivered;
(b) sent by telecopier, facsimile transmission or other electronic means
of transmitting written documents; or (c) sent by private overnight mail
courier service. If personally delivered, such communications shall be
deemed delivered upon actual receipt by Agent or Investor, as the case may
be; if electronically transmitted pursuant to this paragraph, such
communications shall be deemed delivered the next business day after
transmission (and sender shall bear the burden of proof of delivery); and
if sent by overnight courier pursuant to this paragraph, such
communications shall be deemed delivered upon actual receipt by Agent or
Investor, as the case may be.
(k) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
(l) Waiver of Jury Trial. VHC, EACH OF THE SHAREHOLDERS AND
INVESTOR, KNOWINGLY, VOLUNTARILY AND INTENTIONALLY, HEREBY WAIVE ANY RIGHT
THEY MIGHT OTHERWISE HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT, OR IN THE COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF ANY PARTY.
(m) Entire Agreement. This Agreement constitutes the entire
understanding and agreement between the parties hereto with respect to the
transactions contemplated herein, and there have been and are no
agreements, understandings, restrictions, representations or warranties
between the parties other than those set forth or provided for herein.
IN WITNESS WHEREOF, the parties hereto have executed this instrument
as of the date first written above.
VISION HEALTH CARE, INC., a DENTAL NETWORK, INC., a
Florida corporation Florida corporation
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx Tie Xxxx
Xxxxx X. Xxxxx, President Xxxxx Tie Xxxx, President
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxxxx, O.D. Xxxxx X. Xxxxx, O.D.
Address:____________________ Address:____________________
____________________________ ____________________________
Telephone No.: Telephone No.:
Facsimile No.: Facsimile No.:
/s/ Xxxxxx X. Xxxxxxxxx /s/ Xxxxxxx X. Xxxxx
Xxxxxx X. Xxxxxxxxx, O.D. Xxxxxxx X. Xxxxx, O.D.
Address:____________________ Address:____________________
____________________________ ____________________________
Telephone No.: Telephone No.:
Facsimile No.: Facsimile No.:
/s/ Xxx X. Xxxxxxx /s/ Xxxxxxxx X. Xxxxxxxxx
Xxx X. Xxxxxxx, C.P.A., M.S.M. Xxxxxxxx X. Xxxxxxxxx, O.D.
Address:____________________ Address:____________________
____________________________ ____________________________
Telephone No.: Telephone No.:
Facsimile No.: Facsimile No.:
/s/ Xxxx X. Xxxxxx /s/ Xxxxxxx X. Xxxx
Xxxx X. Xxxxxx, O.D. Xxxxxxx X. Xxxx
Address:____________________ Address:____________________
____________________________ ____________________________
Telephone No.: Telephone No.:
Facsimile No.: Facsimile No.:
/s/ Xxxxxxxx X. Xxxxxx /s/ Xxxx X. Xxxxxxx
Xxxxxxxx X. Xxxxxx Xxxx X. Xxxxxxx, O.D.
Address:____________________ Address:____________________
____________________________ ____________________________
Telephone No.: Telephone No.:
Facsimile No.: Facsimile No.:
/s/ Xxxxx Xxxxxx /s/ Xxxxxxx X. Xxxxxx
Xxxxx Xxxxxx Xxxxxxx X. Xxxxxx
Address:____________________ Address:____________________
____________________________ ____________________________
Telephone No.: Telephone No.:
Facsimile No.: Facsimile No.:
/s/ Xxxxxxxxx X. Xxxxx /s/ Xxxx X. Xxxxxxx
Xxxxxxxxx X. Xxxxx Xxxx X. Xxxxxxx
Address:____________________ Address:____________________
____________________________ ____________________________
Telephone No.: Telephone No.:
Facsimile No.: Facsimile No.:
SCHEDULE A
GUARANTY PERCENTAGE
Number of Number Shares
Number Original of New Purchased Total Shares Guaranty
Shareholder of Shares1 Options2 Options3 in Offering4 and Options Percentage
Xxxxxxx, J. 7,875 15,700 3,488 0 27,063 13.63%
Xxxxxxxxx, H. 15,750 15,700 4,653 0 36,103 18.18%
Xxxxxxx, R. 7,875 7,850 2,327 0 18,052 9.09%
Xxxxxx, A. 7,875 15,700 3,488 0 27,063 13.63%
Xxxxxx, M. 7,875 0 1,165 0 9,040 4.55%
Xxxxx, P. 7,875 15,700 3,488 0 27,063 13.63%
Xxxxx, J. 7,875 0 1,165 0 9,040 4.55%
Xxxxxxxxx, T. 7,875 15,700 3,488 0 27,063 13.63%
Xxxx, R. 7,875 0 1,165 0 9,040 4.55%
Xxxxxxx, J. 7,875 0 1,165 0 9,040 4.55%
TOTAL 86,625 86,350 25,594 0 198,569 100.00%
_________________________________
1 Includes shares received prior to the Offering.
2 Includes options granted under VHC's incentive option plan.
3 Includes options granted for guarantee of Put Option.
4 Includes shares bought in the offering (excluding those bought
through IRAs).
